I am writing today to announce the closure of the New Mexico Independent. After three and a half years of operation in New Mexico, the board of the American Independent News Network, has decided to shift publication of its news…
While environmental activists played their part yesterday during demonstrations at the capitol building, going so far as to dress up as solar panels and to sing the tune of “You Are My Sunshine,” their counterparts, the anti-cap-and-trade contingency who has…
Roughly one quarter of University of New Mexico students are unimpressed with the state’s flagship public school, according to a survey that questioned college students about their higher education experiences.
The Jemez Mountain School District received a clean bill of health from an auditing firm just months before an alleged $3.3 million embezzlement scheme was uncovered, the Albuquerque Journal reports today.
Reporter Martin Salazar writes that “Accounting & Consulting Group LLP gave the Jemez Mountain school system unqualified opinions on both its financial statements and on its federally funded programs.”
An unqualified opinion is often referred to as “clean” and means an auditor believes financial statements are accurate and conform with generally accepted accounting principles, according to the Journal. The positive audit opinion was issued in March.
If you haven’t been following this story, the district’s longtime business manager, Kathy Borrego, is alleged to have embezzled $3.3 million from the tiny school district in northern New Mexico over several years.
The size and sophistication of the scheme surprised state officials last month and led the New Mexico Public Education Department to take over the district’s finances.
According to an executive summary of a special report published by the Office of the State Auditor, Borrego stole more than 530 checks, forged signatures and cleared them through the Valley National Bank in Española over seven years.
Five hundred and thirty five of the checks were cashed or deposited into various personal accounts, while three checks were “provided to other subjects who cashed or deposited the amounts into their accounts,” reads the executive summary from a special report put out by the State Auditor’s Office.
It is unclear who those other individuals are.
The executive summary showed that while checks were drawn on 10 separate school district accounts, Borrego allegedly used the payroll account and an account called “SB-9″ more than the others to pull off the scheme. A total of 104 checks totaling $621,000 were drawn on the payroll account while 210 checks worth more than $1.34 million were drawn on the “SB-9″ account, according to the summary.
The district also didn’t use good fiscal practices, like divvying up duties — putting one person in charge of purchasing, another of bank statements and still another watching the internal ledger, State Auditor Hector Balderas told me two and a half weeks ago.
The Journal noted today that the March audit raised “multiple red flags over the district’s accounting methods and lack of internal controls, which act as a checks-and-balances system to reduce the likelihood of fraud and make it more likely such activities are detected.”
Balderas told Salazar that he’s not surprised the independent audit failed to detect alleged embezzlement, saying “In the short two years that I’ve been state auditor, I’ve concluded that the financial auditing system we have in place is really inadequate to provide the type of protections and assurances that citizens deserve.”
Balderas told Salazar that hundreds of millions of dollars in state funds are at risk because the state auditing function is massively underfunded. He said while his office is responsible for overseeing 600 to 700 state and local government entities, it has only about a dozen in-house auditors.
That sounds similar to what Balderas told me in mid August, when he said the embezzlement went undetected for so long because the state is in “an accountability crisis.”
The week before Balderas’ special report on Jemez Mountain School District came out in mid August he issued a risk advisory to school district school board members, superintendents and administrators statewide. The advisory warned school districts that certain weaknesses in internal control structure and the failure to submit annual audits may create an environment in which fraud and embezzlement can easily occur.
Jemez Mountain School District’s school superintendent, Adan Delgado, meanwhile, is reserving judgment on the March audit, he told Salazar.
Here’s an excerpt of the Journal story:
“It is surprising to me that something of that magnitude didn’t come out in what they were doing,” he said. “The state Auditor’s Office is looking at that at this point. I’m sure they’ll have an opinion on that at some point after they’ve had some time to look at it.”
